Supervisor proposes $1 million in budget cuts

Southampton Town Supervisor Linda Kabot is proposing a series of midyear cuts that would trim $1 million of spending in an effort to balance the 2009 budget, and she said an additional $1 million in cuts will be needed to craft a balanced budget for 2010.

Ms. Kabot said she is expecting a $2 million shortfall due to a dropoff in mortgage tax revenues, and her proposed cuts aim to compensate for that decline.

At the same time, the Town Board is considering amending the town’s tax cap law, which mandates that the tax rate cannot be increased more than 5 percent from the prior year, to allow the town to break the cap to make payments as part of the town’s deficit reduction plan. Through that plan, the town must pay back inter-fund loans from the general fund that were allocated to the police and highway funds from 2003 through 2007, which resulted in deficits to those funds of some $7.5 million.

The debate over the tax cap amendment is being held open for another month and will be discussed again on July 28.

While Town Board members agreed that midyear cuts are necessary, they asked for another two weeks in order to get a more accurate picture of the town’s finances from Town Comptroller Tamara Wright. What board members want to see are the actual dollar amounts department heads have on hand and how much they have spent so they know exactly what the impact of any cuts would be.

Ms. Kabot, though she agreed to hold off on the cuts, said the town’s situation is “dire” and that the cuts have to be made.

“I don’t think department heads realize how serious this is,” she said. “We may not make payroll by the end of this year.”

Ms. Wright agreed that the department heads do not understand the severity of the town’s financial condition and urged the board to make it clear to them.

“No one is disagreeing with you that cuts are needed,” Town Councilwoman Anna Throne-Holst said. “But we should sit down with our department heads and make sure we are dealing with actual numbers. I’m just not sure what these proposed cuts are based on.”

Among the cuts Ms. Kabot wants to make are the abolition of four vacant positions in town government: a senior kennel attendant at the animal shelter, with a $32,169 salary; a messenger in the town clerk’s office, at $34,786 per year; an environmental analyst, at $48,025 per year; and a principal planner in the land management department, at $66,669 per year. The positions would be terminated as of July 1.

Because some of these positions had been filled at various times during the year and some of the salaries already paid out, the total savings after July 1 would amount to $117,650. Ms. Kabot said.

The supervisor’s cuts also pare down overtime allocations for all union employees. Ms. Kabot said the contract with the union allows her to revoke the budgetary allocations for overtime and compensate workers with 1.5 days off for every day of overtime accumulated, rather than time-and-a-half pay for those days.

“This scenario is under management rights in the contract, and I have final say, with the department heads, as to money or comp time,” Ms. Kabot said, adding that this was a big issue with union employees who prefer money over time off. “But I have limited amounts of money and declining revenue, so I need to curtail overtime as an area of spending.”

Other cuts would be made to various contractual expenses and discretionary spending, such as office supplies, travel, seminars and training and part-time help, according to Ms. Kabot’s proposal.

While the supervisor agreed that more accurate numbers are needed, she argued that enacting her proposed cuts would “stop the spending now.”

“These are only proposals,” Town Councilwoman Sally Pope argued. “I can’t support this until I have actual numbers.”

Town Councilman Chris Nuzzi said the board could get the point across to the various department heads as to the town’s finances and still hold off on enacting the cuts until more accurate figures were produced.

Ms. Wright said she was working on providing the board members with more accurate figures. “I’ve inherited a lot of disorganization in this office,” she said. “It takes time to come up with more actual numbers.”

In the meantime, the board agreed to immediately send a memo to all the department heads and employees authorized to make expenditures emphasizing the troubled state of the town’s finances. Ms. Kabot said that any purchase order over $500 would have to cross her desk for approval. That threshold had previously been lowered from $5,000 to $1,000.

Ms. Kabot added that—along with cuts in expenditures—in order to balance the budget, expenses for the Highway Administration and Stormwater Abatement departments need to be shifted from the general fund to alternative sources, with Highway Administration funded through a tax levy and Stormwater Abatement through the Capital Program.

Ms. Kabot said the dramatic downturn in the economy and a drastic drop in mortgage tax revenues necessitate the cuts. Ms. Kabot said the expense side of the ledger for 2009 had to be reduced as the “rainy day” funds are dried up and not able to cover the projected loss.

According to Ms. Kabot, the struggling real estate market has resulted in less mortgage tax revenues. For the past several years, the town was able to over-budget its projected mortgage tax revenues by as much as $4 million, which aided the town in keeping property taxes low. In other words, the town would budget for $8 million in mortgage taxes, but would take in $12 million. That excess revenue offered the town a means to suppress the tax rate and offset spending. In crafting her 2009 budget, Ms. Kabot projected $7.5 million in mortgage taxes—a 30 percent decline from the $12 million generated in the past few years. But in the last six months, only $2.5 million in mortgage taxes have been collected and now town officials forecast only another $3 million to round out the year.

If that trend holds, then the town will have collected only $5.5 million in mortgage taxes for 2009, $2 million less than originally budgeted.

The budget cuts the Town Board is considering are merely “stop-gap” measures, according to the supervisor.

“Working with the Town Board, I will need to further pare down another $2 million by year-end 2009 going into 2010 due to lack of any further rainy day funds available to sustain staffing levels and existing programs,” Ms. Kabot said.